The AMF advises investors to stay away from binary options
If you’re on the hunt for investments with quick, easy, and high returns at any cost, you’re likely vulnerable to fraudsters, and may fall into the common trap posed by binary options.
In recent years, the Autorité des marchés financiers (AMF) has been on the lookout for binary options schemes offered through web platforms or mobile applications, and has worked to educate the public about their warning signs and risks. As of Dec. 12, 2017, offering binary options with a maturity date of less than 30 days is officially prohibited across Canada.
WHAT ARE BINARY OPTIONS?
Binary options platforms generally promise investors quick returns that will never really be paid out, as fraudsters will embezzle the money invested by their victims. The “professionals” you think you’re speaking to are, in fact, fraudsters using aggressive sales techniques and likely operating in call centres located abroad.
Binary options can be thought of as a game of chance or lottery. You’re invited to bet, most of the time using your credit card, on the rise or fall in the value of an asset over a very short period of time – 10 minutes, for example. This asset could be in the form of shares, a commodity, a currency and, more recently, a cryptocurrency. At maturity, you face two possibilities: a virtual gain determined in advance or the loss of your bet.
Several platforms give investors confidence by offering them the opportunity to simulate bets with fictitious amounts. Typically, an investor will open an account and begin to earn winnings by betting small fictitious amounts.
“Once people feel comfortable, they often put in real amounts, which can quickly rise to several thousand dollars,” said Annie Leblanc, an investigator at the AMF. “However, the results displayed on the platforms are in no way related to actual market fluctuations; rather, they’re manipulated to the benefit of the promoters of these platforms. It’s a fraud.”
DO NOT BECOME TRAPPED
The AMF has observed that, in the majority of cases, investors in binary options schemes were asked to transmit copies of photo identification, including their passport and driver’s licence, to claim their virtual winnings. The result? In addition to never receiving the winnings they were promised, these investors were also subject to the many significant risks posed by identity theft. The phenomenon is particularly troublesome: according to the data compiled by the Canadian Securities Administrators, the losses incurred by victims who invested in binary options in 2017 totalled nearly $13 million, and this reported amount is thought to only be the tip of the iceberg.
NOTHING TO GAIN, EVERYTHING TO LOSE
“No matter what messages you read about binary options or the arguments you hear from so-called professionals, remember that selling binary options to the general public is illegal and the risk of losing everything without the chance of recovery is real,” Leblanc said.
A GLOBAL SCOURGE TO STOP
“We are working hard to fight binary options,” she added. “The frequently circulated warnings and the recent ban are part of it. Since binary options do not distinguish among geographical borders, we actively participate in various working groups – including with members of the FBI and Europol – to help build our capacity to tackle this global problem.”
The AMF encourages members of the public to denounce any form of solicitation related to binary options; what’s more, in Quebec no platform or mobile application is authorized to market or offer these financial products.
For more information on binary options, visit
lautorite.qc.ca or contact an agent at the Information Centre at 1-877-525-0337.